Question

Question 7: Balance of Payments

To answer this question, you must obtain data from the Bureau of Economic Analysis (BEA), on the U.S. balance of payment (BOP) tables. Go to interactive tables to obtain annual data for 2019 (Note: the default setting is for quarterly data). It may take you some time to become familiar with how to navigate the website. You need only refer to Table 1 on the BOP accounts. Using the BOP data, compute the following for the United States (rounding to the nearest billion):

(a) Trade balance (TB), net factor income from abroad (NFIA), net unilateral transfers (NUT), and current account (CA)

(b) Financial account (FA)

(c) Official settlements balance (OSB), referred to as “U.S. official reserve assets” and “Foreign official assets in the U.S.”

(d) Nonreserve financial account (NRFA)
(e) Balance of payments (BOP). Note that this may not equal zero because of statistical

discrepancy. Verify that the discrepancy is the same as the one reported by the BEA.

(f) Gross national expenditure (GNE), gross national income (GNI), and gross national dis- posable income (GNDI)

(g) In macroeconomics, we often assume the U.S. economy is a closed economy when building models that describe how changes in policy and shocks affect the economy. Based on the previous data (BOP and GDP), do you think this is a reasonable assumption to make? Do international transactions account for a large share of total transactions (involving goods and services, or income) involving the United States?

Answer 1

(In$ billion*)

a) Trade Balance = Import of goods and services - Export of goods and services

= 779,447 - 634,210

= $145,237

Net factor Income from abroad =Factor income from abroad - Factor income to abroad

= 278,452 - 225,153

=53,299

Net unilateral transfer = Secondary income reciepts - secondary income payments

= 35,055 - 69,732

=$. - 34,677. (deficit balance)

Current Account = Export from goods and services and income reciepts - Import from goods and services income payments

= $ 947,716 - $ 1,074,333

= $ 126,617

b) Financial Accounts = Net US acquisition of financial asset - Net US acquisition of financial liabilities

=$ 84,497 - $1,58,290

=$ - 73,793.

c) OSB = $208, as given above in statement.